AWP settlements set to impact pharmacy

ALEXANDRIA, Va. – A federal appeals court has upheld a district court ruling that approves the controversial First DataBank and Medi-Span settlements.

The decision means that effective September 26, average wholesale prices (AWPs) of drugs paid to pharmacies will be reduced to 120% of the wholesale acquisition cost (WAC), a move that the National Association of Chain Drug Stores and the Food Marketing Institute (FMI) warn will have devastating consequences for retailers.

“For three years, NACDS and allied organizations have been successful through legal action in preventing reductions to published AWPs for prescription drugs. This has prevented subsequent reductions in reimbursement to pharmacies for the patient care they provide and thus has been a campaign that was worth waging on behalf of pharmacies and the patients they serve,” states president and chief executive officer Steve Anderson.

“We have maintained — and continue to maintain — that pharmacies and patient care should not be harmed by legal proceedings in which pharmacies were not originally involved. That is what occurred when First DataBank and Medi-Span reached a settlement related to the publishing of reduced AWPs. The appellate court’s ruling that now allows the reduction of AWPs does not signify the end of the campaign but rather shifts the urgency for action to other arenas.”

Anderson says the reduction of AWPs threatens to cut pharmacy reimbursement for drugs below their costs, which he characterizes as “an untenable position” for any health care provider and for any business.

“Fortunately, some private payers are taking steps to remedy this situation by making appropriate reimbursement adjustments,” he notes. “Likewise, we renew our call today to state Medicaid programs to take the only viable course for patient care and to address the flawed reimbursement that the reduced AWPs will create. For the good of beneficiaries, pharmacy looks forward to working with public payers to address this fragile situation.”

In April NACDS and FMI filed a motion that sought a stay to stop the AWP reductions.
That action came about a month after U.S. District Judge Patti Sar­is found that First Data­Bank and Medi-Span had fraudulently conspired to raise AWPs for prescription drugs, to the detriment of payers and consumers.

The order requires them to cut AWPs for the 1,442 drug codes from 125% of WAC to 120% of WAC by September 26.

In the most recent ruling, the court said the extended litigation has given the pharmacy interests “a lengthy period to prepare for the rollback,” a period extended by the district judge to 180 days after final judgment.